Indian markets likely to get a good start on positive regional cues

The Indian markets presented a strong show in last session and markets returned to their gaining path after two days of consolidation. Though, there was not much on the economy front and the rupee too remained volatile, but traders depicting faith in the Indian equity markets and went for value buying, taking the major indices higher by over a percent. Today, the start is likely to be in green, though there will be some cautiousness too in the markets across the globe ahead of the US employment data. Meanwhile, a day after Finance Minister P Chidambaram exhorted banks to pass on the benefit of rate cuts, Reserve Bank of India Governor D Subbarao too has endorsed the call to pass on the benefit of rate cuts to customers and has said that the central bank is also “very conscious” of the need to be supportive of economic growth. There will be some buzz in the sugar stocks on report that the government is planning to increase import duty on sugar to 15 percent from the current 10 per percent in order to curb shipments and clear sugarcane arrears to farmers. The pharma sector stocks too may see some action as there is a buzz that the Finance Ministry may defer 10 proposals for FDI in pharmaceutical sector that are listed to be taken up at the FIPB meeting today.

The US markets remained closed, unable to give any cues to the other global markets. However,the Asian markets have made an all green start taking cues from the European markets, which bounced back after the ECB kept its interest rate at a record low of 0.5 per cent and signalled that very low rates would be in place for an extended period. The weakness in yen has supported the Japanese market to move higher by over a percent in early trade.

Back home, after displaying a distressing performance in last two sessions, Indian benchmark indices managed to pull through a scintillating session by vivaciously rallying over a percentage point on Thursday, thanks to the hefty short covering in the beaten down, but fundamentally strong stocks. The relentless across the board value picking ensured that the frontline indices settle comfortably above the psychological 5,800 (Nifty) and 19,400 (Sensex) levels. Sentiments remained up-beat since beginning amid the tentative recovery in risk appetite globally. But, a bout of volatility was witnessed in mid-afternoon trade as key benchmark indices pared most of their intraday gains tracking weakness in Indian rupee which turned lower after breaching 60/$ mark in early deals. Meanwhile, Reserve Bank of India’s governor D Subbarao’s statement that the monetary policy transmission is not as agile as needed too dampened the sentiments. However, the profit booking proved short-lived as volatility ruled the roost in late trade as the key benchmark indices extended gains to strike intraday high. Supportive cues from US markets provided the much needed support to local markets initially. Investors’ morale got buttressed on the back of stronger-than-expected US jobs data. Back home, buying in software and technology counters uplifted the sentiments. Stocks like Infosys, TCS, Wipro and HCL Technology edged higher on government’s notification that allows SEZs and units operating in them to not pay service tax - instead of paying the tax and then claiming refunds. Sentiments also remained up-beat as investors continued to pile-up positions in FMCG stocks. Dabur, Marico and GSK Consumer Healthcare edged higher on the back of early arrival and prospects of a good monsoon, which raised expectations of growth in uptake in rural areas that account for up to 50 per cent of their sales. Banking stocks too ended mostly in the green after Finance minister P. Chidambaram urged state-run banks to lower their minimum lending rate and issue more loans to stimulate economic growth. Additionally, Aviation stocks viz. Spicejet, and Kingfisher Airlines surged on reports that suggested Government is looking into plea for review of FDI in aviation. Finally, the BSE Sensex surged 233.08 points or 1.22% to settle at 19410.84, while the CNX Nifty climbed by 66.05 points or 1.14 % to end at 5,836.95.